Germany’s construction turnaround now not expected until 2027

Liebherr MK 140-5.1 at work in Mannheim, Germany (Photo: Liebherr)

Construction industry association Bauindustrie dropped its forecast for 2026 revenue from 2.5% real growth to just 1%.

It said the move was in line with growing scepticism from research institutes in the country over the sector’s performance so far this year.

“Given the sluggish construction activity observed through May and rising construction costs, our original forecast is no longer tenable,” said Tim-Oliver Müller, chief executive of Bauindustrie.

“Residential construction, in particular, will take a hit: we now anticipate only a slight real increase of 0.5%, down from our January estimate of 2%. The fact that we avoided falling into negative territory is due entirely to the figures for June, which showed a significant rise in orders and a slight increase in revenue. However, it remains to be seen whether this truly represents an unexpected turnaround or merely a one-off, short-lived spike.”

The association’s assessment is corroborated by a recent survey of member companies, in which only 30% of respondents expected their company’s revenue to grow in 2026, while an equal number anticipated a decline.

However, Bauindustrie said June figures released by the Federal Statistical Office earlier this month offer a “glimmer of hope”.

They show that incoming orders for the German main construction sector recorded a real, calendar-adjusted increase of 11.3% in June 2026 compared to the same month last year, and a 6% rise compared to the previous month.

But Müller added, “The rule remains: revenue is not the same as profit. Given rising costs that cannot be passed on one-to-one to the client, business owners are pessimistic about earnings.”

Only 13% of respondents expect an increase in earnings, while 43% anticipate a decline.

Almost all reported price hikes for diesel, energy, and building materials, with three-quarters stating that these increased costs cannot be passed on.

Nevertheless, companies are retaining staff (57%) or even expanding their workforce (24%); only 19% expect a reduction.